Nationwide backtracks to allow early-bird savers to swap into its best-buy 4.25% Isa

Nationwide has bowed to pressure and will help upset early-bird savers who stashed cash on the first day of the new tax year only to find a better account arriving the day after.

The building society will now allow those who missed out on its new best-buy 4.25 per cent cash Isa to swap into it, after This is Money highlighted their plight.

We took on the case of a loyal saver who took out an Isa deal on the first day of the new tax year - not
realising the Flexclusive Isa was available – and was then told by
the building society that he could not transfer his cash across to the
better paying account.

Flexclusive Isa: Some eager Nationwide savers took out a deal before they realised the 4.25% was on offer - and cannot transfer across

Nationwide pulled out all the stops for existing customers in the new Isa year with the launch of its Flexclusive Isa [full details].

The account, which is only available
to those that have a current account with the building society, offers a
table-topping 4.25 per cent rate, which blows the nearest competitors –
Natwest [full details], AA [full details] and Cheshire BS [full details], who offer cash Isas at a 3.5 per cent – out of the water.

However,
This is Money has been contacted by an unhappy Nationwide customer who
stashed away his money too early to take advantage of the offer, as, while the account was available it was not promoted on the building society website until the second day of the new tax year.

Graham Gubby, 61, who is retired and lives in Bexhill-on-Sea in Sussex, has been a Nationwide customer for years, holding savings, bonds, mortgages and Isas with the building society.

At the start of the new Isa year - Friday 6 April - he put his maximum 2012/13 allowance - £5,640 - into an existing cash Isa which paid 3.1 per cent, which he believed to be a good deal.

But a few days later, he saw the new Flexclusive Isa offering a rate 1.15 percentage points higher - a considerable amount in a time of low savings rates.

As an existing customer of many years, he would be eligible to take advantage of the account.

When he contacted Nationwide, he was told that transfers were not allowed into the account and now he feels badly let down.

He says that when he contacted the building society, it told him it had received other complaints, but there wasn't a hint to suggest a change in the product conditions to allow transfers in.

What is worse, Mr Gubby said was that when he looks at his online account, a message pops up saying: 'the sooner you open your cash Isa, the more tax-free interest you could earn this year'. That, he says, was like 'rubbing salt in the wounds,' as he could not take advantage of the deal now.

Speaking before This is Money helped secure the u-turn, he said: 'Family, friends and I are likely to switch all my Isas to another product. I’m sure other, hitherto loyal customers will do the same.'

How we helped get a better deal for savers

We fought Mr Gubby's corner and from speaking to Nationwide, it appears the Easter weekend was partly to blame for the confusion and the bank has seemingly pulled a u-turn on the situation.

NATIONWIDE FLEXCLUSIVE ISA - THE FACTS

The Flexclusive Isa a great choice for savers, but only if you're an existing customer [full details].

It pays a market leading 4.25 per cent, with a bonus of 2.25 per cent until 31 October 2013.

It has unlimited withdrawals, can be opened with as little as £1 - but has been created to reward those who use a Nationwide current account, with only those who have paid at least £750 into a FlexAccount each month for the last three, eligible.

If it didn't have these T&C's, it would be firmly in the This is Money top five favourite cash Isa list [read more].

A spokesman for the building society said: 'Any customers who topped up their existing Online Isa on Friday 6 April with this year’s cash Isa allowance can open a Flexclusive Isa and move their 2012/13 money (up to the £5,640 maximum limit) across penalty free.

'Unfortunately, this situation was complicated somewhat due to the timing of the Easter period with the Good Friday holiday landing on the first day of the new tax year.

'Flexclusive Isa is a branch-based account and was fully advertised in all our branches from the close of business on Thursday 5 April and appeared prominently on the website from Saturday 7 April.

'Customers in this situation - such as Mr Gubby - should visit their local branch where they can open a Flexclusive ISA and complete the relevant consolidation form.'

After we spoke to Mr Gubby and told him this he called his branch in St Leonards, Sussex, to see if he could transfer – and they have told him over the phone that he can pop into the branch and now transfer it.

However, Nationwide insist on him putting the Isa money back into his FlexAccount, filling in a form and then putting the money into the new Flexclusive Isa account.

He said: 'I’m slightly annoyed that Nationwide didn’t contact me directly, but it has recognised it has made a mistake and has agreed for me to transfer this year’s Isa allowance into the Flexclusive account.'

He went on to add that he would have rather have been able to transfer it online, but is happy that Nationwide have agreed to allow him to transfer.